REPUBLIC ACT NO.

7942
[AN ACT INSTITUTING A NEW SYSTEM OF MINERAL RESOURCES EXPLORATION,
DEVELOPMENT, UTILIZATION, AND CONSERVATION]

Be it enacted by the Senate and House of Representatives of the Philippines in

Congress assembled:chanroblesvirtuallawlibrary
CHAPTER I
INTRODUCTORY PROVISIONS
Section 1
Title

This Act shall be known as the "Philippine Mining Act of 1995."

Section 2
Declaration of Policy

All mineral resources in public and private lands within the territory and exclusive
economic zone of the Republic of the Philippines are owned by the State. It shall be
the responsibility of the State to promote their rational exploration, development,
utilization and conservation through the combined efforts of government and the
private sector in order to enhance national growth in a way that effectively
safeguards the environment and protect the rights of affected communities.

Section 3
Definition of Terms

As used in and for purposes of this Act, the following terms, whether in singular or
plural, shall mean:chanroblesvirtuallawlibrary
a. Ancestral lands refers to all lands exclusively and actually possessed, occupied,
or utilized by indigenous cultural communities by themselves or through their
ancestors in accordance with their customs and traditions since time immemorial,
and as may be defined and delineated by law.

b. Block or meridional block means an area bounded by one-half (1/2) minute of

latitude and one-half (1/2) minute of longitude, containing approximately eighty-one
hectares (81 has.).

c. Bureau means the Mines and Geosciences Bureau under the Department of
Environment and Natural Resources.

d. Carrying capacity refers to the capacity of natural and human environments to

accommodate and absorb change without experiencing conditions of instability and
attendant degradation.

e. Contiguous zone refers to water, sea bottom and substratum measured twentyfour nautical miles (24 n.m.) seaward from the base line of the Philippine
archipelago.

f. Contract area means land or body of water delineated for purposes of

exploration, development, or utilization of the minerals found therein.

g. Contractor means a qualified person acting alone or in consortium who is a party

to a mineral agreement or to a financial or technical assistance agreement.

h. Co-production agreement (CA) means an agreement entered into between the

Government and one or more contractors in accordance with Section 26(b) hereof.

i. Department means the Department of Environment and Natural Resources.

j. Development means the work undertaken to explore and prepare an ore body or
a mineral deposit for mining, including the construction of necessary infrastructure
and related facilities.

k. Director means the Director of the Mines and Geosciences Bureau.

l. Ecological profile or eco-profile refers to geographic-based instruments for

planners and decision-makers which presents an evaluation of the environmental
quality and carrying capacity of an area.

m. Environmental compliance certificate (ECC) refers to the document issued by

the government agency concerned certifying that the project under consideration
will not bring about an unacceptable environmental impact and that the proponent
has complied with the requirements of the environmental impact statement system.

n. Environmental impact statement (EIS) is the document which aims to identify,

predict, interpret, and communicate information regarding changes in

environmental quality associated with a proposed project and which examines the
range of alternatives for the objectives of the proposal and their impact on the
environment.

o. Exclusive economic zone means the water, sea bottom and subsurface measured
from the baseline of the Philippine archipelago up to two hundred nautical miles
(200 n.m.) offshore.

p. Existing mining/quarrying right means a valid and subsisting mining claim or

permit or quarry permit or any mining lease contract or agreement covering a
mineralized area granted/issued under pertinent mining laws.

q. Exploration means the searching or prospecting for mineral resources by

geological, geochemical or geophysical surveys, remote sensing, test pitting,
trenching, drilling, shaft sinking, tunneling or any other means for the purpose of
determining the existence, extent, quantity and quality thereof and the feasibility of
mining them for profit.

r. Financial or technical assistance agreement means a contract involving financial

or technical assistance for large-scale exploration, development, and utilization of
mineral resources.

s. Force majeure means acts or circumstances beyond the reasonable control of

contractor including, but not limited to, war, rebellion, insurrection, riots, civil
disturbance, blockade, sabotage, embargo, strike, lockout, any dispute with surface
owners and other labor disputes, epidemic, earthquake, storm, flood or other
adverse weather conditions, explosion, fire, adverse action by government or by
any instrumentality or subdivision thereof, act of God or any public enemy and any
cause that herein describe over which the affected party has no reasonable control.

t. Foreign-owned corporation means any corporation, partnership, association, or

cooperative duly registered in accordance with law in which less than fifty per
centum (50%) of the capital is owned by Filipino citizens.

u. Government means the government of the Republic of the Philippines.

v. Gross output means the actual market value of minerals or mineral products
from its mining area as defined in the National Internal Revenue Code.

w. Indigenous cultural community means a group or tribe of indigenous Filipinos

who have continuously lived as communities on communally-bounded and defined

land since time immemorial and have succeeded in preserving, maintaining, and
sharing common bonds of languages, customs, traditions, and other distinctive
cultural traits, and as may be defined and delineated by law.

x. Joint venture agreement (JVA) means an agreement entered into between the
Government and one or more contractors in accordance with Section 26(c) hereof.

y. Mineral processing means the milling, beneficiation or upgrading of ores or

minerals and rocks or by similar means to convert the same into marketable
products.

z. Mine wastes and tailings shall mean soil and rock materials from surface or
underground mining and milling operations with no economic value to the generator
of the same.

aa. Minerals refers to all naturally occurring inorganic substance in solid, gas,
liquid, or any intermediate state excluding energy materials such as coal,
petroleum, natural gas, radioactive materials, and geothermal energy.

ab. Mineral agreement means a contract between the government and a

contractor, involving mineral production-sharing agreement, co-production
agreement, or joint-venture agreement.

ac. Mineral land means any area where mineral resources are found.

ad. Mineral resource means any concentration of minerals/rocks with potential

economic value.

ae. Mining area means a portion of the contract area identified by the contractor for
purposes of development, mining, utilization, and sites for support facilities or in the
immediate vicinity of the mining operations.

af. Mining operation means mining activities involving exploration, feasibility,

development, utilization, and processing.

ag. Non-governmental organization (NGO) includes nonstock, nonprofit

organizations involved in activities dealing with resource and environmental
conservation, management and protection.

ah. Net assets refers to the property, plant and equipment as reflected in the
audited financial statement of the contractor net of depreciation, as computed for
tax purposes, excluding appraisal increase and construction in progress.

ai. Offshore means the water, sea bottom and subsurface from the shore or
coastline reckoned from the mean low tide level up to the two hundred nautical
miles (200 n.m.) exclusive economic zone including the archipelagic sea and
contiguous zone.

aj. Onshore means the landward side from the mean tide elevation, including
submerged lands in lakes, rivers and creeks.

ak. Ore means a naturally occurring substance or material from which a mineral or
element can be mined and/or processed for profit.

al. Permittee means the holder of an exploration permit.

am. Pollution control and infrastructure devices refers to infrastructure, machinery,

equipment and/or improvements used for impounding, treating or neutralizing,
precipitating, filtering, conveying and cleansing mine industrial waste and tailings
as well as eliminating or reducing hazardous effects of solid particles, chemicals,
liquids or other harmful byproducts and gases emitted from any facility utilized in
mining operations for their disposal.

an. President means the President of the Republic of the Philippines.

ao. Private land refers to any land belonging to any private person which includes
alienable and disposable land being claimed by a holder, claimant, or occupant who
has already acquired a vested right thereto under the law, although the
corresponding certificate or evidence of title or patent has not been actually issued.

ap. Public land refers to lands of the public domain which have been classified as
agricultural lands and subject to management and disposition or concession under
existing laws.

aq. Qualified person means any citizen of the Philippines with capacity to contract,
or a corporation, partnership, association, or cooperative organized or authorized
for the purpose of engaging in miring, with technical and financial capability to
undertake mineral resources development and duly registered in accordance with
law at least sixty per centum (60%) of the capital of which is owned by citizens of
the Philippines: Provided, That a legally organized foreign-owned corporation shall

be deemed a qualified person for purposes of granting an exploration permit,

financial or technical assistance agreement or mineral processing permit.

ar. Quarrying means the process of extracting, removing and disposing quarry
resources found on or underneath the surface of private or public land.

as. Quarry permit means a document granted to a qualified person for the
extraction and utilization of quarry resources on public or private lands.

at. Quarry resources refers to any common rock or other mineral substances as the
Director of Mines and Geosciences Bureau may declare to be quarry resources such
as, but not limited to, andesite, basalt, conglomerate, coral sand, diatomaceous
earth, diorite, decorative stones, gabbro, granite, limestone, marble, marl, red
burning clays for potteries and bricks, rhyolite, rock phosphate, sandstone,
serpentine, shale, tuff, volcanic cinders, and volcanic glass: Provided, That such
quarry resources do not contain metals or metallic constituents and/or other
valuable minerals in economically workable quantities: Provided, further, That nonmetallic minerals such as kaolin, feldspar, bull quartz, quartz or silica, sand and
pebbles, bentonite, talc, asbestos, barite, gypsum, bauxite, magnesite, dolomite,
mica, precious and semi-precious stones, and other non-metallic minerals that may
later be discovered and which the: Director declares the same to be of economically
workable quantities, shall not be classified under the category of quarry resources.

au. Regional director means the regional director of any mines regional office under
the Department of Environment and Natural Resources.

av. Regional office means any of the mines regional offices of the Department of
Environment and Natural Resources.

aw. Secretary means the Secretary of the Department of Environment and Natural
Resources.

ax. Special allowance refers to payment to the claim-owners or surface rightowners particularly during the transition period from Presidential Decree No. 463
and Executive Order No. 279, series of 1987.

ay. State means the Republic of the Philippines.

az. Utilization means the extraction or disposition of minerals.

CHAPTER II

GOVERNMENT MANAGEMENT
Section 4
Ownership of Mineral Resources

Mineral resources are owned by the State and the exploration, development,
utilization, and processing thereof shall be under its full control and supervision. The
State may directly undertake such activities or it may enter into mineral
agreements with contractors.
The State shall recognize and protect the rights of the indigenous cultural
communities to their ancestral lands as provided for by the Constitution.

Section 5
Mineral Reservations

When the national interest so requires, such as when there is a need to preserve
strategic raw materials for industries critical to national development, or certain
minerals for scientific, cultural or ecological value, the President may establish
mineral reservations upon the recommendation of the Director through the
Secretary. Mining operations in existing mineral reservations and such other
reservations as may thereafter be established, shall be undertaken by the
Department or through a contractor: Provided, That a small scale-mining
cooperative covered by Republic Act No. 7076 shall be given preferential right to
apply for a small-scale mining agreement for a maximum aggregate area of twentyfive percent (25%) of such mineral reservation, subject to valid existing
mining/quarrying rights as provided under Section 112 Chapter XX hereof. All
submerged lands within the contiguous zone and in the exclusive economic zone of
the Philippines are hereby declared to be mineral reservations.
A ten per centum (10%) share of all royalties and revenues to be derived by the
government from the development and utilization of the mineral resources within
mineral reservations as provided under this Act shall accrue to the Mines and
Geosciences Bureau to be allotted for special projects and other administrative
expenses related to the exploration and development of other mineral reservations
mentioned in Section 6 hereof.

Section 6
Other Reservations

Mining operations in reserved lands other than mineral reservations may be

undertaken by the Department, subject to limitations as herein provided. In the
event that the Department cannot undertake such activities, they may be
undertaken by a qualified person in accordance with the rules and regulations
promulgated by the Secretary. The right to develop and utilize the minerals found
therein shall be awarded by the President under such terms and conditions as

recommended by the Director and approved by the Secretary: Provided, That the
party who undertook the exploration of said reservation shall be given priority. The
mineral land so awarded shall be automatically excluded from the reservation
during the term of the agreement: Provided, further, That the right of the lessee of a
valid mining contract existing within the reservation at the time of its establishment
shall not be prejudiced or impaired.

Section 7
Periodic Review of Existing Mineral Reservations

The Secretary shall periodically review existing mineral reservations for the purpose
of determining whether their continued existence is consistent with the national
interest, and upon his recommendation, the President may, by proclamation, alter
or modify the boundaries thereof or revert the same to the public domain without
prejudice to prior existing rights.

Section 8
Authority of the Department

The Department shall be the primary government agency responsible for the
conservation, management, development, and proper use of the States mineral
resources including those in reservations, watershed areas, and lands of the public
domain. The Secretary shall have the authority to enter into mineral agreements on
behalf of the Government upon the recommendation of the Director, promulgate
such rules and regulations as may be necessary to implement the intent and
provisions of this Act.

Section 9
Authority of the Bureau

The Bureau shall have direct charge in the administration and disposition of mineral
lands and mineral resources and shall undertake geological, mining, metallurgical,
chemical, and other researches as well as geological and mineral exploration
surveys. The Director shall recommend to the Secretary the granting of mineral
agreements to duly qualified persons and shall monitor the compliance by the
contractor of the terms and conditions of the mineral agreements. The Bureau may
confiscate surety, performance and guaranty bonds posted through an order to be
promulgated by the Director. The Director may deputize, when necessary, any
member or unit of the Philippine National Police, barangay, duly registered nongovernmental organization (NGO) or any qualified person to police all mining
activities.

Section 10
Regional Offices

There shall be as many regional offices in the country as may be established by the
Secretary, upon the recommendation of the Director.

Section 11
Processing of Applications

The system of processing applications for mining rights shall be prescribed in the
rules and regulations of this Act.

Section 12
Survey, Charting and Delineation of Mining Areas

A sketch plan or map of the contract or mining area prepared by a deputized

geodetic engineer suitable for publication purposes shall be required during the
filing of a mineral agreement or financial or technical assistance agreement
application. Thereafter, the contract or mining area shall be surveyed and
monumented by a deputized geodetic engineer or bureau geodetic engineer and
the survey plan shall be approved by the Director before the approval of the mining
feasibility.

Section 13
Meridional Blocks

For purposes of the delineation of the contract or mining areas under this Act, the
Philippine territory and its exclusive economic zone shall be divided into meridional
blocks of one-half (1/2) minute of latitude and one-half (1/2) minute of longitude.

Section 14
Recording System

There shall be established a national and regional filing and recording system. A
mineral resource database system shall be set up in the Bureau which shall include,
among others, a mineral rights management system. The Bureau shall publish at
least annually, a mineral gazette of nationwide circulation containing among others,
a current list of mineral rights, their location in the map, mining rules and

regulations, other official acts affecting mining, and other information relevant to
mineral resources development. A system and publication fund shall be included in
the regular budget of the Bureau.
CHAPTER III
SCOPE OF APPLICATION
Section 15
Scope of Application

This Act shall govern the exploration, development, utilization and processing of all
mineral resources.
Section 16
Opening of Ancestral Lands for Mining Operations

No ancestral land shall be opened for mining-operations without prior consent of the
indigenous cultural community concerned.

Section 17
Royalty Payments
for Indigenous Cultural Communities

In the event of an agreement with an indigenous cultural community pursuant to

the preceding section, the royalty payment, upon utilization of the minerals shall be
agreed upon by the parties. The said royalty shall form part of a trust fund for the
socioeconomic well-being of the indigenous cultural community.

Section 18
Areas Open to Mining Operations

Subject to any existing rights or reservations and prior agreements of all parties, all
mineral resources in public or private lands, including timber or forestlands as
defined in existing laws, shall be open to mineral agreements or financial or
technical assistance agreement applications. Any conflict that may arise under this
provision shall be heard and resolved by the panel of arbitrators.

Section 19
Areas Closed to Mining Applications

Mineral agreement or financial or technical assistance agreement applications shall

not be allowed:chanroblesvirtuallawlibrary
a. In military and other government reservations, except upon prior written
clearance by the government agency concerned;

b. Near or under public or private buildings, cemeteries, archeological and historic

sites, bridges, highways, waterways, railroads, reservoirs, dams or other
infrastructure projects, public or private works including plantations or valuable
crops, except upon written consent of the government agency or private entity
concerned;

c. In areas covered by valid and existing mining rights;

d. In areas expressedly prohibited by law;

e. In areas covered by small-scale miners as defined by law unless with prior

consent of the small-scale miners, in which case a royalty payment upon the
utilization of minerals shall be agreed upon by the parties, said royalty forming a
trust fund for the socioeconomic development of the community concerned; and

f. Old growth or virgin forests, proclaimed watershed forest reserves, wilderness

areas, mangrove forests, mossy forests, national parks provincial/municipal forests,
parks, greenbelts, game refuge and bird sanctuaries as defined by law and in areas
expressly prohibited under the National Integrated Protected Areas System (NIPAS)
under Republic Act No. 7586, Department Administrative Order No. 25, series of
1992 and other laws.
CHAPTER IV
EXPLORATION PERMIT
Section 20
Exploration Permit

An exploration permit grants the right to conduct exploration for all minerals in
specified areas. The Bureau shall have the authority to grant an exploration Permit
to a qualified person.

Section 21
Terms and Conditions of the Exploration Permit

An exploration permit shall be for a period of two (2) years, subject to annual review
and relinquishment or renewal upon the recommendation of the Director.

Section 22
Maximum Areas for Exploration Permit

The maximum area that a qualified person may hold at any one time shall
be:chanroblesvirtuallawlibrary
a. Onshore, in any one province
1. for individuals, twenty (20) blocks: and

b. for partnerships, corporations, cooperatives, or associations, two hundred (200)

blocks.

b. Onshore, in the entire Philippines

1. for individuals, forty (40) blocks; and

2. for partnerships, corporations, cooperatives, or associations, four hundred (400)

blocks.

c. Offshore, beyond five hundred meters (500m) from the mean low tide
level:chanroblesvirtuallawlibrary
1. for individuals, one hundred (100) blocks; and

2. for partnerships, corporations, cooperatives, or associations, one thousand

(1,000) blocks.
Section 23
Rights and Obligations of the Permittee

An exploration permit shall grant to the permittee, his heirs or successors-ininterest, the right to enter, occupy and explore the area: Provided, That if private or
other parties are affected, the permittee shall first discuss with the said parties the
extent, necessity, and manner of his entry, occupation and exploration and in case
of disagreement, a panel of arbitrators shall resolve the conflict or disagreement.
The permittee shall undertake an exploration work on the area as specified by its
permit based on an approved work program.

Any expenditure in excess of the yearly budget of the approved work program may
be carried forward and credited to the succeeding years covering the duration of
the permit. The Secretary, through the Director, shall promulgate rules and
regulations governing the terms and conditions of the permit.
The permittee may apply for a mineral production sharing agreement, joint venture
agreement, co-production agreement or financial or technical assistance agreement
over the permit area, which application shall be granted if the permittee meets the
necessary qualifications and the terms and conditions of any such agreement:
Provided, That the exploration period covered by the exploration permit shall be
included as part of the exploration period of the mineral agreement or financial or
technical assistance agreement.

Section 24
Declaration of Mining Project Feasibility

A holder of an exploration permit who determines the commercial viability of a

project covering a mining area may, within the term of the permit, file with the
Bureau a declaration of mining project feasibility accompanied by a work program
for development. The approval of the mining project feasibility and compliance with
other requirements provided in this Act shall entitle the holder to an exclusive right
to a mineral production sharing agreement or other mineral agreements or financial
or technical assistance agreement.

Section 25
Transfer or Assignment

An exploration permit may be transferred or assigned to a qualified person subject

to the approval of the Secretary upon the recommendation of the Director.
CHAPTER V
MINERAL AGREEMENTS
Section 26
Modes of Mineral Agreement

For purposes of mining operations, a mineral agreement may take the following
forms as herein defined:chanroblesvirtuallawlibrary
a. Mineral production sharing agreement is an agreement where the Government
grants to the contractor the exclusive right to conduct mining operations within a
contract area and shares in the gross output. The contractor shall provide the
financing, technology, management and personnel necessary for the
implementation of this agreement.

b. Co-production agreement is an agreement between the Government and the

contractor wherein the Government shall provide inputs to the mining operations
other than the mineral resource.

c. Joint venture agreement is an agreement where a joint-venture company is

organized by the Government and the contractor with both parties having equity
shares. Aside from earnings in equity, the Government shall be entitled to a share in
the gross output.
A mineral agreement shall grant to the contractor the exclusive right to conduct
mining operations and to extract all mineral resources found in the contract area. In
addition, the contractor may be allowed to convert his agreement into any of the
modes of mineral agreements or financial or technical assistance agreement
covering the remaining period of the original agreement subject to the approval of
the Secretary.

Section 27
Eligibility

A qualified person may enter into any of the three (3) modes of mineral agreement
with the government for the exploration, development and utilization of mineral
resources: Provided, That in case the applicant has been in the mining industry for
any length of time, he should possess a satisfactory environmental track record as
determined by the Mines and Geosciences Bureau and in consultation with the
Environmental Management Bureau of the Department.

Section 28
Maximum Areas for Mineral Agreement

The maximum area that a qualified person may hold at any time under a mineral
agreement shall be:chanroblesvirtuallawlibrary
a. Onshore, in any one province
1. for individuals, ten (10) blocks; and

2. for partnerships, cooperatives, associations, or corporations, one hundred (100)

blocks.

b. Onshore, in the entire Philippines

1. for individuals, twenty (20) blocks; and

2. for partnerships, cooperatives, associations, or corporations, two hundred (200)

blocks.

c. Offshore, in the entire Philippines

1. for individuals fifty (50) blocks;

2. for partnerships, cooperatives, associations, or corporations, five hundred (500)

blocks; and

3. for the exclusive economic zone, a larger area to be determined by the

Secretary.
The maximum areas mentioned above that a contractor may hold under a mineral
agreement shall not include mining/quarry areas under operating agreements
between the contractor and a claimowner/lessee/permittee/licensee entered into
under Presidential Decree No. 463.

Section 29
Filing and Approval of Mineral Agreements

All proposed mineral agreements shall be filed in the region where the areas of
interest are located, except in mineral reservations which shall be filed with the
Bureau.
The filing of a proposal for a mineral agreement shall give the proponent the prior
right to areas covered by the same. The proposed mineral agreement will be
approved by the Secretary and copies thereof shall be submitted to the President.
Thereafter, the President shall provide a list to Congress of every approved mineral
agreement within thirty (30) days from its approval by the Secretary.

Section 30
Assignment/Transfer

Any assignment or transfer of rights and obligations under any mineral agreement
except a financial or technical assistance agreement shall be subject to the prior
approval of the Secretary. Such assignment or transfer shall be deemed
automatically approved if not acted upon by the Secretary within thirty (30) working
days from official receipt thereof, unless patently unconstitutional or illegal.

Section 31
Withdrawal from Mineral Agreements

The contractor may, by giving due notice at any time during the term of the
agreement, apply for the cancellation of the mineral agreement due to causes
which, in the opinion of the contractor, make continued mining operations no longer
feasible or viable. The Secretary shall consider the notice and issue its decision
within a period of thirty (30) days: Provided, That the contractor has met all its
financial, fiscal and legal obligations.

Section 32
Terms

Mineral agreements shall have a term not exceeding twenty-five (25) years to start
from the date of execution thereof, and renewable for another term not exceeding
twenty-five (25) years under the same terms and conditions thereof, without
prejudice to changes mutually agreed upon by the parties. After the renewal period,
the operation of the mine may be undertaken by the Government or through a
contractor. The contract for the operation of a mine shall be awarded to the highest
bidder in a public bidding after due publication of the notice thereof: Provided, That
the contractor shall have the right to equal the highest bid upon reimbursement of
all reasonable expenses of the highest bidder.
CHAPTER VI
FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENT
Section 33
Eligibility

Any qualified person with technical and financial capability to undertake large-scale
exploration, development, and utilization of mineral resources in the Philippines
may enter into a financial or technical assistance agreement directly with the
Government through the Department.

Section 34
Maximum Contract Area

The maximum contract area that may be granted per qualified person, subject to
relinquishment shall be:chanroblesvirtuallawlibrary
a. 1,000 meridional blocks onshore;

b. 4,000 meridional blocks offshore; or

c. Combinations of a and b provided that it shall not exceed the maximum limits for
onshore and offshore areas.
Section 35
Terms and Conditions

The following terms, conditions, and warranties shall be incorporated in the financial
or technical assistance agreement, to wit:chanroblesvirtuallawlibrary
a. A firm commitment in the form of a sworn statement, of an amount
corresponding to the expenditure obligation that will be invested in the contract
area: Provided, That such amount shall be subject to changes as may be provided
for in the rules and regulations of this Act;

b. A financial guarantee bond shall be posted in favor of the Government in an

amount equivalent to the expenditure obligation of the applicant for any year;

c. Submission of proof of technical competence, such as, but not limited to, its
track record in mineral resource exploration, development, and utilization; details of
technology to be employed in the proposed operation; and details of technical
personnel to undertake the operation;

d. Representations and warranties that the applicant has all the qualifications and
none of the disqualifications for entering into the agreement;

e. Representations and warranties that the contractor has or has access to all the
financing, managerial and technical expertise and, if circumstances demand, the
technology required to promptly and effectively carry out the objectives of the
agreement with the understanding to timely deploy these resources under its
supervision pursuant to the periodic work programs and related budgets, when
proper, providing an exploration period up to two (2) years, extendible for another
two (2) years but subject to annual review by the Secretary in accordance with the
implementing rules and regulations of this Act, and further, subject to the
relinquishment obligations;

f. Representations and warranties that, except for payments for dispositions for its
equity, foreign investments in local enterprises which are qualified for repatriation,
and local suppliers credits and such other generally accepted and permissible
financial schemes for raising funds for valid business purposes, the contractor shall
not raise any form of financing from domestic sources of funds, whether in
Philippine or foreign currency, for conducting its mining operations for and in the
contract area;

g. The mining operations shall be conducted in accordance with the provisions of

this Act and its implementing rules and regulations;

h. Work programs and minimum expenditures commitments;

i. Preferential use of local goods and services to the maximum extent practicable;

j. A stipulation that the contractors are obligated to give preference to Filipinos in

all types of mining employment for which they are qualified and that technology
shall be transferred to the same;

k. Requiring the proponent to effectively use appropriate anti-pollution technology

and facilities to protect the environment and to restore or rehabilitate mined out
areas and other areas affected by mine tailings and other forms of pollution or
destruction;

l. The contractors shall furnish the Government records of geologic, accounting,

and other relevant data for its mining operations, and that book of accounts and
records shall be open for inspection by the government;

m. Requiring the proponent to dispose of the minerals and byproducts produced

under a financial or technical assistance agreement at the highest price and more
advantageous terms and conditions as provided for under the rules and regulations
of this Act;

n. Provide for consultation and arbitration with respect to the interpretation and
implementation of the terms and conditions of the agreements; and

o. Such other terms and conditions consistent with the Constitution and with this
Act as the Secretary may deem to be for the best interest of the State and the
welfare of the Filipino people.
Section 36
Negotiations

A financial or technical assistance agreement shall be negotiated by the

Department and executed and approved by the President. The President shall notify
Congress of all financial or technical assistance agreements within thirty (30) days
from execution and approval thereof.

Section 37
Filing and Evaluation of Financial or Technical Assistance Agreement Proposals

All financial or technical assistance agreement proposals shall be filed with the
Bureau after payment of the required processing fees. If the proposal is found to be
sufficient and meritorious in form and substance after evaluation, it shall be
recorded with the appropriate government agency to give the proponent the prior
right to the area covered by such proposal: Provided, That existing mineral
agreements, financial or technical assistance agreements and other mining rights
are not impaired or prejudiced thereby. The Secretary shall recommend its approval
to the President.

Section 38
Term of Financial
or Technical Assistance Agreement

A financial or technical assistance agreement shall have a term not exceeding

twenty-five (25) years to start from the execution thereof, renewable for not more
than twenty-five (25) years under such terms and conditions as may be provided by
law.

Section 39
Option to Convert into a Mineral Agreement

The contractor has the option to convert the financial or technical assistance
agreement to a mineral agreement at any time during the term of the agreement, if
the economic viability of the contract area is found to be inadequate to justify largescale mining operations, after proper notice to the Secretary as provided for under
the implementing rules and regulations: Provided, That the mineral agreement shall
only be for the remaining period of the original agreement.
In the case of a foreign contractor, it shall reduce its equity to forty percent (40%) in
the corporation, partnership, association, or cooperative. Upon compliance with this
requirement by the contractor, the Secretary shall approve the conversion and
execute the mineral production-sharing agreement.

Section 40
Assignment/Transfer

A financial or technical assistance agreement may be assigned or transferred, in

whole or in part, to a qualified person subject to the prior approval of the President:
Provided, That the President shall notify Congress of every financial or technical
assistance agreement assigned or converted in accordance with this provision
within thirty (30) days from the date of the approval thereof.

Section 41
Withdrawal from Financial
or Technical Assistance Agreement

The contractor shall manifest in writing to the Secretary his intention to withdraw
from the agreement, if in his judgment the mining project is no longer economically
feasible, even after he has exerted reasonable diligence to remedy the cause or the
situation. The Secretary may accept the withdrawal: Provided, That the contractor
has complied or satisfied all his financial, fiscal or legal obligations.
CHAPTER VII
SMALL-SCALE MINING
Section 42
Small-scale Mining

Small-scale mining shall continue to be governed by Republic Act No. 7076 and
other pertinent laws.
CHAPTER VIII
QUARRY RESOURCES
Section 43
Quarry Permit

Any qualified person may apply to the provincial/city mining regulatory board for a
quarry permit on privately-owned lands and/or public lands for building and
construction materials such as marble, basalt, andesite, conglomerate, tuff, adobe,
granite, gabbro, serpentine, inset filling materials, clay for ceramic tiles and building
bricks, pumice, perlite and other similar materials that are extracted by quarrying
from the ground. The provincial governor shall grant the permit after the applicant
has complied with all the requirements as prescribed by the rules and regulations.
The maximum area which a qualified person may hold at any one time shall be five
hectares (5 has.): Provided, That in large-scale quarry operations involving cement
raw materials, marble, granite, sand and gravel and construction aggregates, a
qualified person and the government may enter into a mineral agreement as
defined herein.

A quarry permit shall have a term of five (5) years, renewable for like periods but
not to exceed a total term of twenty-five (25) years. No quarry permit shall be
issued or granted on any area covered by a mineral agreement or financial or
technical assistance agreement.

Section 44
Quarry Fee and Taxes

A permittee shall, during the term of his permit, pay a quarry fee as provided for
under the implementing rules and regulations. The permittee shall also pay the
excise tax as provided by pertinent laws.

Section 45
Cancellation of Quarry Permit

A quarry permit may be cancelled by the provincial governor for violations of the
provisions of this Act or its implementing rules and regulations or the terms and
conditions of said permit: Provided, That before the cancellation of such permit, the
holder thereof shall be given the opportunity to be heard in an investigation
conducted for the purpose.

Section 46
Commercial Sand and Gravel Permit

Any qualified person may be granted a permit by the provincial governor to extract
and remove sand and gravel or other loose or unconsolidated materials which are
used in their natural state, without undergoing processing from an area of not more
than five hectares (5 has.) and in such quantities as may be specified in the permit.

Section 47
Industrial Sand and Gravel Permit

Any qualified person may be granted an industrial sand and gravel permit by the
Bureau for the extraction of sand and gravel and other loose or unconsolidated
materials that necessitate the use of mechanical processing covering an area of
more than five hectares (5 has.) at any one time. The permit shall have a term of
five (5) years, renewable for a like period but not to exceed a total term of twentyfive (25) years.

Section 48
Exclusive Sand and Gravel Permit

Any qualified person may be granted an exclusive sand and gravel permit by the
provincial governor to quarry and utilize sand and gravel or other loose or
unconsolidated materials from public lands for his own use, provided that there will
be no commercial disposition thereof.
A mineral agreement or a financial technical assistance agreement contractor shall,
however, have the right to extract and remove sand and gravel and other loose
unconsolidated materials without need of a permit within the area covered by the
mining agreement for the exclusive use in the mining operations: Provided, That
monthly reports of the quantity of materials extracted therefrom shall be submitted
to the mines regional office concerned: Provided, further, That said right shall be
coterminous with the expiration of the agreement.
Holders of existing mining leases shall likewise have the same rights as that of a
contractor: Provided, That said right shall be coterminous with the expiry dates of
the lease.

Section 49
Government Gratuitous Permit

Any government entity or instrumentality may be granted a gratuitous permit by

the provincial governor to extract sand and gravel, quarry or loose unconsolidated
materials needed in the construction of building and/or infrastructure for public use
or other purposes over an area of not more than two hectares (2 has.) for a period
coterminous with said construction.

Section 50
Private Gratuitous Permit

Any owner of land may be granted a private gratuitous permit by the provincial
governor.

Section 51
Guano Permit

Any qualified person may be granted a guano permit by the provincial governor to
extract and utilize loose unconsolidated guano and other organic fertilizer materials
in any portion of a municipality where he has established domicile. The permit shall

be for specific caves and/or for confined sites with locations verified by the
Departments field officer in accordance with existing rules and regulations.

Section 52
Gemstone Gathering Permit

Any qualified person may be granted a non-exclusive gemstone gathering permit by

the provincial governor to gather loose stones useful as gemstones in rivers and
other locations.
CHAPTER IX
TRANSPORT, SALE AND PROCESSING OF MINERALS
Section 53
Ore Transport Permit

A permit specifying the origin and quantity of non-processed mineral ores or

minerals shall be required for their transport. Transport permits shall be issued by
the mines regional director who has jurisdiction over the area where the ores were
extracted. In the case of mineral ores or minerals being transported from the smallscale mining areas to the custom mills or processing plants, the Provincial Mining
Regulatory Board (PMRB) concerned shall formulate their own policies to govern
such transport of ores produced by small-scale miners. The absence of a permit
shall be considered as prima facie evidence of illegal mining and shall be sufficient
cause for the Government to confiscate the ores or minerals being transported, the
tools and equipment utilized, and the vehicle containing the same. Ore samples not
exceeding two metric tons (2 m.t.) to be used exclusively for assay or pilot test
purposes shall be exempted from such requirement.

Section 54
Mineral Trading Registration

No person shall engage in the trading of mineral products, either locally or

internationally, unless registered with the Department of Trade and Industry and
accredited by the Department, with a copy of said registration submitted to the
Bureau.

Section 55
Minerals Processing Permit

No person shall engage in the processing of minerals without first securing a

minerals processing permit from the Secretary. Minerals processing permit shall be
for a period of five (5) years renewable for like periods but not to exceed a total
term of twenty-five (25) years. In the case of mineral ores or minerals produced by
the small-scale miners, the processing thereof as well as the licensing of their
custom mills, or processing plants shall continue to be governed by the provisions of
Republic Act No. 7076.
Section 56
Eligibility of Foreign-owned/-controlled Corporation

A foreign-owned/-controlled corporation may be granted a mineral processing

permit.
CHAPTER X
DEVELOPMENT OF MINING COMMUNITIES, SCIENCE AND MINING TECHNOLOGY
Section 57
Expenditure for Community Development
and Science and Mining Technology

A contractor shall assist in the development of its mining community, the promotion
of the general welfare of its inhabitants, and the development of science and mining
technology.

Section 58
Credited Activities

Activities that may be credited as expenditures for development of mining

communities, and science and mining technology are the
following:chanroblesvirtuallawlibrary
a. Any activity or expenditure intended to enhance the development of the mining
and neighboring communities of a mining operation other than those required or
provided for under existing laws, or collective bargaining agreements, and the like;
and

b. Any activity or expenditure directed towards the development of geosciences

and mining technology such as, but not limited to, institutional and manpower
development, and basic and applied researches. Appropriate supervision and
control mechanisms shall be prescribed in the implementing rules and regulations
of this Act.
Section 59

Training and Development

A contractor shall maintain an effective program of manpower training and

development throughout the term of the mineral agreement and shall encourage
and train Filipinos to participate in all aspects of the mining operations, including
the management thereof. For highly-technical and specialized mining operations,
the contractor may, subject to the necessary government clearances, employ
qualified foreigners.

Section 60
Use of Indigenous Goods, Services and Technologies

A contractor shall give preference to the use of local goods, services and scientific
and technical resources in the mining operations, where the same are of equivalent
quality, and are available on equivalent terms as their imported counterparts.

Section 61
Donations/Turn Over of Facilities

Prior to cessation of mining operations occasioned by abandonment or withdrawal

of operations, on public lands by the contractor, the latter shall have a period of one
(1) year therefrom within which to remove his improvements; otherwise, all the
social infrastructure and facilities shall be turned over or donated tax-free to the
proper government authorities, national or local, to ensure that said infrastructure
and facilities are continuously maintained and utilized by the host and neighboring
communities.

Section 62
Employment of Filipinos

A contractor shall give preference to Filipino citizens in all types of mining

employment within the country insofar as such citizens are qualified to perform the
corresponding work with reasonable efficiency and without hazard to the safety of
the operations. The contractor, however, shall not be hindered from hiring
employees of his own selection, subject to the provisions of Commonwealth Act No.
613, as amended, for technical and specialized work which, in his judgment and
with the approval of the Director, requires highly-specialized training or long
experience in exploration, development or utilization of mineral resources: Provided,
That in no case shall each employment exceed five (5) years or the payback period
as represented in original project study, whichever is longer: Provided, further, That
each foreigner employed as mine manager, vice-president for operations or in an

equivalent managerial position in charge of mining, milling, quarrying or drilling

operation shall:chanroblesvirtuallawlibrary
a. Present evidence of his qualification and work experience; or

b. Shall pass the appropriate government licensure examination; or

c. In special cases, may be permitted to work by the Director for a period not
exceeding one (1) year: Provided, however, That if reciprocal privileges are
extended to Filipino nationals in the country of domicile, the Director may grant
waivers or exemptions.
CHAPTER XI
SAFETY AND ENVIRONMENTAL PROTECTION
Section 63
Mines Safety and Environmental Protection

All contractors and permittees shall strictly comply with all the mines safety rules
and regulations as may be promulgated by the Secretary concerning the safe and
sanitary upkeep of the mining operations and achieve waste-free and efficient mine
development. Personnel of the Department involved in the implementation of mines
safety, health and environmental rules and regulations shall be covered under
Republic Act No. 7305.

Section 64
Mine Labor

No person under sixteen (16) years of age shall be employed in any phase of mining
operations and no person under eighteen (18) years of age shall be employed
underground in a mine.

Section 65
Mine Supervision

All mining and quarrying operations that employ more than fifty (50) workers shall
have at least one (1) licensed mining engineer with at least five (5) years of
experience in mining operations, and one (1) registered foreman.

Section 66

Mine Inspection

The regional director shall have exclusive jurisdiction over the safety inspection of
all installations, surface or underground, in mining operations at reasonable hours of
the day or night and as much as possible in a manner that will not impede or
obstruct work in progress of a contractor or permittee.

Section 67
Power to Issue Orders

The mines regional director shall, in consultation with the Environmental

Management Bureau, forthwith or within such time as specified in his order, require
the contractor to remedy any practice connected with mining or quarrying
operations, which is not in accordance with safety and anti-pollution laws and
regulations. In case of imminent danger to life or property, the mines regional
director may summarily suspend the mining or quarrying operations until the
danger is removed, or appropriate measures are taken by the contractor or
permittee.

Section 68
Report of Accidents

In case of any incident or accident, causing or creating the danger of loss of life or
serious physical injuries, the person in charge of operations shall immediately report
the same to the regional office where the operations are situated. Failure to report
the same without justifiable reason shall be a cause for the imposition of
administrative sanctions prescribed in the rules and regulations implementing this
Act.

Section 69
Environmental Protection

Every contractor shall undertake an environmental protection and enhancement

program covering the period of the mineral agreement or permit. Such
environmental program shall be incorporated in the work program which the
contractor or permittee shall submit as an accompanying document to the
application for a mineral agreement or permit. The work program shall include not
only plans relative to mining operations but also to rehabilitation, regeneration,
revegetation and reforestation of mineralized areas, slope stabilization of mined-out
and tailings covered areas, aquaculture, watershed development and water
conservation; and socioeconomic development.

Section 70
Environmental Impact Assessment (EIA)

Except during the exploration period of a mineral agreement or financial or

technical assistance agreement or an exploration permit, an environmental
clearance certificate shall be required based on an environmental impact
assessment and procedures under the Philippine Environmental Impact Assessment
System including Sections 26 and 27 of the Local Government Code of 1991 which
require national government agencies to maintain ecological balance, and prior
consultation with the local government units, non-governmental and peoples
organizations and other concerned sectors of the community: Provided, That a
completed ecological profile of the proposed mining area shall also constitute part
of the environmental impact assessment. Peoples organizations and nongovernmental organizations shall be allowed and encouraged to participate in
ensuring that contractors/permittees shall observe all the requirements of
environmental protection.

Section 71
Rehabilitation

Contractors and permittees shall technically and biologically rehabilitate the

excavated, mined-out, tailings covered and disturbed areas to the condition of
environmental safety, as may be provided in the implementing rules and
regulations of this Act. A mine rehabilitation fund shall be created, based on the
contractors approved work program, and shall be deposited as a trust fund in a
government depository bank and used for physical and social rehabilitation of areas
and communities affected by mining activities and for research on the social,
technical and preventive aspects of rehabilitation. Failure to fulfill the above
obligation shall mean immediate suspension or closure of the mining activities of
the contractor/permittee concerned.
CHAPTER XII
AUXILIARY MINING RIGHTS
Section 72
Timber Rights

Any provision of law to the contrary notwithstanding, a contractor may be granted a

right to cut trees or timber within his mining area as may be necessary for his
mining operations subject to forestry laws, rules and regulations: Provided, That if
the land covered by the mining area is already covered by existing timber
concessions, the volume of timber needed and the manner of cutting and removal
thereof shall be determined by the mines regional director, upon consultation with
the contractor, the timber concessionaire/permittee and the Forest Management

Bureau of the Department: Provided, further, That in case of disagreement between

the contractor and the timber concessionaire, the matter shall be submitted to the
Secretary whose decision shall be final. The contractor shall perform reforestation
work within his mining area in accordance with forestry laws, rules and regulations.

Section 73
Water Rights

A contractor shall have water rights for mining operations upon approval of
application with the appropriate government agency in accordance with existing
water laws, rules and regulations promulgated thereunder: Provided, That water
rights already granted or vested through long use, recognized and acknowledged by
local customs, laws, and decisions of courts shall not thereby be impaired: Provided,
further, That the Government reserves the right to regulate water rights and the
reasonable and equitable distribution of water supply so as to prevent the monopoly
of the use thereof.

Section 74
Right to Possess Explosives

A contractor/exploration permittee shall have the right to possess and use

explosives within his contract/permit area as may be necessary for his mining
operations upon approval of application with the appropriate government agency in
accordance with existing laws, rules and regulations promulgated thereunder:
Provided, That the Government reserves the right to regulate and control the
explosive accessories to ensure safe mining operations.

Section 75
Easement Rights

When mining areas are so situated that for purposes of more convenient mining
operations it is necessary to build, construct or install on the mining areas or lands
owned, occupied or leased by other persons, such infrastructure as roads, railroads,
mills, waste dump sites, tailings ponds, warehouses, staging or storage areas and
port facilities, tramways, runways, airports, electric transmission, telephone or
telegraph lines, dams and their normal flood and catchment areas, sites for water
wells, ditches, canals, new river beds, pipelines, flumes, cuts, shafts, tunnels, or
mills, the contractor, upon payment of just compensation, shall be entitled to enter
and occupy said mining areas or lands.

Section 76

Entry into Private Lands and Concession Areas

Subject to prior notification, holders of mining rights shall not be prevented from
entry into private lands and concession areas by surface owners, occupants, or
concessionaires when conducting mining operations therein: Provided, That any
damage done to the property of the surface owner, occupant, or concessionaire as a
consequence of such operations shall be properly compensated as may be provided
for in the implementing rules and regulations: Provided, further, That to guarantee
such compensation, the person authorized to conduct mining operation shall, prior
thereto, post a bond with the regional director based on the type of properties, the
prevailing prices in and around the area where the mining operations are to be
conducted, with surety or sureties satisfactory to the regional director.
CHAPTER XIII
SETTLEMENT OF CONFLICTS
Section 77
Panel of Arbitrators

There shall be a panel of arbitrators in the regional office of the Department

composed of three (3) members, two (2) of whom must be members of the
Philippine Bar in good standing and one a licensed mining engineer or a professional
in a related field, and duly designated by the Secretary as recommended by the
Mines and Geosciences Bureau Director. Those designated as members of the panel
shall serve as such in addition to their work in the Department without receiving any
additional compensation As much as practicable, said members shall come from the
different bureaus of the Department in the region. The presiding officer thereof shall
be selected by the drawing of lots. His tenure as presiding officer shall be on a
yearly basis. The members of the panel shall perform their duties and obligations in
hearing and deciding cases until their designation is withdrawn or revoked by the
Secretary. Within thirty (30) working days, after the submission of the case by the
parties for decision, the panel shall have exclusive and original jurisdiction to hear
and decide on the following:chanroblesvirtuallawlibrary
a. Disputes involving rights to mining areas;

b. Disputes involving mineral agreements or permits;

c. Disputes involving surface owners, occupants and claimholders/concessionaires;

and

d. Disputes pending before the Bureau and the Department at the date of the
effectivity of this Act.
Section 78
Appellate Jurisdiction

The decision or order of the panel of arbitrators may be appealed by the party not
satisfied thereto to the Mines Adjudication Board within fifteen (15) days from
receipt thereof which must decide the case within thirty (30) days from submission
thereof for decision.

Section 79
Mines Adjudication Board

The Mines Adjudication Board shall be composed of three (3) members. The
Secretary shall be the chairman with the Director of the Mines and Geosciences
Bureau and the Undersecretary for Operations of the Department as members
thereof. The Board shall have the following powers and
functions:chanroblesvirtuallawlibrary
a. To promulgate rules and regulations governing the hearing and disposition of
cases before it, as well as those pertaining to its internal functions, and such rules
and regulations as may be necessary to carry out its functions;

b. To administer oaths, summon the parties to a controversy, issue subpoenas

requiring the attendance and testimony of witnesses or the production of such
books, papers, contracts, records, statement of accounts, agreements, and other
documents as may be material to a just determination of the matter under
investigation, and to testify in any investigation or hearing conducted in pursuance
of this Act;

c. To conduct hearings on all matters within its jurisdiction, proceed to hear and
determine the disputes in the absence of any party thereto who has been
summoned or served with notice to appear, conduct its proceedings or any part
thereof in public or in private, adjourn its hearings at any time and place, refer
technical matters or accounts to an expert and to accept his report as evidence
after hearing of the parties upon due notice, direct parties to be joined in or
excluded from the proceedings, correct, amend, or waive any error, defect or
irregularity, whether in substance or in form, give all such directions as it may deem
necessary or expedient in the determination of the dispute before it, and dismiss
the mining dispute as part thereof, where it is trivial or where further proceedings
by the Board are not necessary or desirable:chanroblesvirtuallawlibrary
1. To hold any person in contempt, directly or indirectly, and impose appropriate
penalties therefor; and

2. To enjoin any or all acts involving or arising from any case pending before it
which, if not restrained forthwith, may cause grave or irreparable damage to any of
the parties to the case or seriously affect social and economic stability.

In any proceeding before the Board, the rules of evidence prevailing in courts of law
or equity shall not be controlling and it is the spirit and intention of this Act that
shall govern. The Board shall use every and all reasonable means to ascertain the
facts in each case speedily and objectively and without regard to technicalities of
law or procedure, all in the interest of due process. In any proceeding before the
Board, the parties may be represented by legal counsel. The findings of fact of the
Board shall be conclusive and binding on the parties and its decision or order shall
be final and executory.
A petition for review by certiorari and question of law may be filed by the aggrieved
party with the Supreme Court within thirty (30) days from receipt of the order or
decision of the Board.
CHAPTER XIV
GOVERNMENT SHARE
Section 80
Government Share
in Mineral Production Sharing Agreement

The total government share in a mineral production sharing agreement shall be the
excise tax on mineral products as provided in Republic Act No. 7729, amending
Section 151(a) of the National Internal Revenue Code, as amended.

Section 81
Government Share in Other Mineral Agreements

The share of the Government in co-production and joint-venture agreements shall

be negotiated by the Government and the contractor taking into consideration
the:chanroblesvirtuallawlibrary
a. capital investment of the project;

b. risks involved;

c. contribution of the project to the economy; and

d. other factors that will provide for a fair and equitable sharing between the
Government and the contractor.
The Government shall also be entitled to compensations for its other contributions
which shall be agreed upon by the parties, and shall consist, among other things,
the contractors income tax, excise tax, special allowance, withholding tax due from
the contractors foreign stockholders arising from dividend or interest payments to

the said foreign stockholders, in case of a foreign national, and all such other taxes,
duties and fees as provided for under existing laws.
The Government share in financial or technical assistance agreement shall consist
of, among other things, the contractors corporate income tax, excise tax, special
allowance, withholding tax due from the contractors foreign stockholders arising
from dividend or interest payments to the said foreign stockholder in case of a
foreign national and all such other taxes, duties and fees as provided for under
existing laws.
The collection of Government share in financial or technical assistance agreement
shall commence after the financial or technical assistance agreement contractor has
fully recovered its pre-operating expenses, exploration, and development
expenditures, inclusive.

Section 82
Allocation of Government Share

The Government share as referred to in the preceding sections shall be shared and
allocated in accordance with Sections 290 and 292 of Republic Act No. 7160
otherwise known as the Local Government Code of 1991. In case the development
and utilization of mineral resources is undertaken by a government-owned or
-controlled corporation, the sharing and allocation shall be in accordance with
Sections 291 and 292 of the said Code.
CHAPTER XV
TAXES AND FEES
Section 83
Income Taxes

After the lapse of the income tax holiday as provided for in the Omnibus
Investments Code, the contractor shall be liable to pay income tax as provided in
the National Internal Revenue Code, as amended.

Section 84
Excise Tax on Mineral Products

The contractor shall be liable to pay the excise tax on mineral products as provided
for under Section 151 of the National Internal Revenue Code: Provided, however,
That with respect to a mineral production sharing agreement, the excise tax on
mineral products shall be the government share under said agreement.

Section 85

Mine Wastes and Tailings Fees

A semi-annual fee to be known as mine wastes and tailings fee is hereby imposed
on all operating mining companies in accordance with the implementing rules and
regulations. The mine wastes and tailings fee shall accrue to a reserve fund to be
used exclusively for payment for damages to:chanroblesvirtuallawlibrary
a. Lives and personal safety;

b. Lands, agricultural crops and forest products, marine life and aquatic resources,
cultural resources; and

c. Infrastructure and the revegetation and rehabilitation of silted farm lands and
other areas devoted to agriculture and fishing caused by mining pollution.
This is in addition to the suspension or closure of the activities of the contractor at
any time and the penal sanctions imposed upon the same.
The Secretary is authorized to increase mine wastes and tailings fees, when public
interest so requires, upon the recommendation of the Director.

Section 86
Occupation Fees

There shall be collected from any holder of a mineral agreement, financial or

technical assistance agreement or exploration permit on public or private lands, an
annual occupation fee in accordance with the following
schedule:chanroblesvirtuallawlibrary
a. For exploration permit Five pesos (P5.00) per hectare or fraction thereof per
annum;

b. For mineral agreements and financial or technical assistance agreements Fifty

pesos (P50.00) per hectare or fraction thereof per annum; and

c. For mineral reservation One hundred pesos (P100.00) per hectare or fraction
thereof per annum.
The Secretary is authorized to increase the occupation fees provided herein when
the public interest so requires, upon recommendation of the Bureau Director.

Section 87
Manner of Payment of Fees

The fees shall be paid on the date the mining agreement is registered with the
appropriate office and on the same date every year thereafter. It shall be paid to the
treasurer of the municipality or city where the onshore mining areas are located, or
to the Director in case of offshore mining areas. For this purpose, the appropriate
officer shall submit to the treasurer of the municipality or city where the onshore
mining area is located, a complete list of all onshore mining rights registered with
his office, indicating therein the names of the holders, area in hectares, location,
and date registered. If the fee is not paid on the date specified, it shall be increased
by twenty-five per centum (25%).

Section 88
Allocation of Occupation Fees

Thirty per centum (30%) of all occupational fees collected from holders of mining
rights in onshore mining areas shall accrue to the province and seventy per centum
(70%) to the municipality in which the onshore mining areas are located. In a
chartered city, the full amount shall accrue to the city concerned.

Section 89
Filing Fees and Other Charges

The Secretary is authorized to charge reasonable filing fees and other charges as he
may prescribe in accordance with the implementing rules and regulations.
CHAPTER XVI
INCENTIVES
Section 90
Incentives

The contractors in mineral agreements, and financial or technical assistance

agreements shall be entitled to the applicable fiscal and non-fiscal incentives as
provided for under Executive Order No. 226, otherwise known as the Omnibus
Investments Code of 1987. Provided, That holders of exploration permits may
register with the Board of Investments and be entitled to the fiscal incentives
granted under the said Code for the duration of the permits or extensions thereof:
Provided, further, That mining activities shall always be included in the investment
priorities plan.

Section 91
Incentives for Pollution Control Devices

Pollution control devices acquired, constructed or installed by contractors shall not

be considered as improvements on the land or building where they are placed, and
shall not be subject to real property and other taxes or assessments: Provided,
however, That payment of mine wastes and tailings fees is not exempted.

Section 92
Income Tax-Carry Forward of Losses

A net operating loss without the benefit of incentives incurred in any of the first ten
(10) years of operations may be carried over as a deduction from taxable income for
the next five (5) years immediately following the year of such loss. The entire
amount of the loss shall be carried over to the first of the five (5) taxable years
following the loss, and any portion of such loss which exceeds the taxable income of
such first year shall be deducted in like manner from the taxable income of the next
remaining four (4) years.

Section 93
Income Tax-Accelerated Depreciation

Fixed assets may be depreciated as follows:chanroblesvirtuallawlibrary

a. To the extent of not more than twice as fast as the normal rate of depreciation or
depreciated at normal rate of depreciation if the expected life is ten (10) years or
less; or

b. Depreciated over any number of years between five (5) years and the expected
life if the latter is more than ten (10) years, and the depreciation thereon allowed as
deduction from taxable income: Provided, That the contractor notifies the Bureau of
Internal Revenue at the beginning of the depreciation period which depreciation
rate allowed by this section will be used.
In computing for taxable income, unless otherwise provided in this Act, the
contractor may, at his option, deduct exploration and development expenditures
accumulated at cost as of the date of the prospecting or exploration and
development expenditures paid or incurred during the taxable year: Provided, That
the total amount deductible for exploration and development expenditures shall not
exceed twenty-five per centum (25%) of the net income from mining operations.
The actual exploration and development expenditures minus the twenty-five per
centum (25%) net income from mining shall be carried forward to the succeeding
years until fully deducted.
Net income from mining operation is defined as gross income from operations less
allowable deductions which are necessary or related to mining operations. Allowable
deductions shall include mining, milling and marketing expenses, depreciation of
properties directly used in the mining operations. This paragraph shall not apply to

expenditures for the acquisition or improvement of property of a character which is

subject to the allowances for depreciation.

Section 94
Investment Guarantees

The contractor shall be entitled to the basic rights and guarantees provided in the
Constitution and such other rights recognized by the government as enumerated
hereunder:chanroblesvirtuallawlibrary
a. Repatriation of investments. The right to repatriate the entire proceeds of the
liquidation of the foreign investment in the currency in which the investment was
originally made and at the exchange rate prevailing at the time of repatriation.

b. Remittance of earnings. The right to remit earnings from the investment in the
currency in which the foreign investment was originally made and at the exchange
rate prevailing at the time of remittance.

c. Foreign loans and contracts. The right to remit at the exchange rate prevailing at
the time of remittance such sums as may be necessary to meet the payments of
interest and principal on foreign loans and foreign obligations arising from financial
or technical assistance contracts.

d. Freedom from expropriation. The right to be free from expropriation by the

Government of the property represented by investments or loans, or of the property
of the enterprise except for public use or in the interest of national welfare or
defense and upon payment of just compensation. In such cases, foreign investors or
enterprises shall have the right to remit sums received as compensation for the
expropriated property in the currency in which the investment was originally made
and at the exchange rate prevailing at the time of remittance.

e. Requisition of investment. The right to be free from requisition of the property

represented by the investment or of the property of the enterprises except in case
of war or national emergency and only for the duration thereof. Just compensation
shall be determined and paid either at the time or immediately after cessation of
the state of war or national emergency. Payments received as compensation for the
requisitioned property may be remitted in the currency in which the investments
were originally made and at the exchange rate prevailing at the time of remittance.

f. Confidentiality. Any confidential information supplied by the contractor pursuant

to this Act and its implementing rules and regulations shall be treated as such by
the Department and the Government, and during the term of the project to which it
relates.

CHAPTER XVII
GROUND FOR CANCELLATION, REVOCATION, AND TERMINATION
Section 95
Late or Non-filing of Requirements

Failure of the permittee or contractor to comply with any of the requirements

provided in this Act or in its implementing rules and regulations, without a valid
reason, shall be sufficient ground for the suspension of any permit or agreement
provided under this Act.

Section 96
Violation of the Terms and Conditions
of Permits or Agreements

Violation of the terms and conditions of the permits or agreements shall be a

sufficient ground for cancellation of the same.

Section 97
Non-Payment of Taxes and Fees

Failure to pay the taxes and fees due the Government for two (2) consecutive years
shall cause the cancellation of the exploration permit, mineral agreement, financial
or technical assistance agreement and other agreements and the re-opening of the
area subject thereof to new applicants.

Section 98
Suspension or Cancellation
of Tar Incentives and Credits

Failure to abide by the terms and conditions of tax incentive and credits shall cause
the suspension or cancellation of said incentives and credits.

Section 99
Falsehood or Omission of Facts in the Statement

All statements made in the exploration permit, mining agreement and financial or
technical assistance agreement shall be considered as conditions and essential
parts thereof and any falsehood in said statements or omission of facts therein
which may alter, change or affect substantially the facts set forth in said statements
may cause the revocation and termination of the exploration permit, mining
agreement and financial or technical assistance agreement.
CHAPTER XVIII
ORGANIZATIONAL AND INSTITUTIONAL ARRANGEMENTS
Section 100
From Staff Bureau to Line Bureau

The Mines and Geosciences Bureau is hereby transformed into a line bureau
consistent with Section 9 of this Act: Provided, That under the Mines and
Geosciences Bureau shall be the necessary mines regional, district and other
pertinent offices the number and specific functions of which shall be provided in
the implementing rules and regulations of this Act.
CHAPTER XIX
PENAL PROVISIONS
Section 101
False Statements

Any person who knowingly presents any false application, declaration, or evidence
to the Government or publishes or causes to be published any prospectus or other
information containing any false statement relating to mines, mining operations or
mineral agreements, financial or technical assistance agreements and permits shall,
upon conviction, be penalized by a fine of not exceeding Ten thousand pesos
(P10,000.00).

Section 102
Illegal Exploration

Any person undertaking exploration work without the necessary exploration permit
shall, upon conviction, be penalized by a fine of not exceeding Fifty thousand pesos
(P50,000.00).

Section 103
Theft of Minerals

Any person extracting minerals and disposing the same without a mining
agreement, lease, permit, license, or steals minerals or ores or the products thereof
from mines or mills or processing plants shall, upon conviction, be imprisoned from
six (6) months to six (6) years or pay a fine from Ten thousand pesos (P10,000.00)
to Twenty thousand pesos (P20,000.00) or both, at the discretion of the appropriate
court. In addition, he shall be liable to pay damages and compensation for the
minerals removed, extracted, and disposed of. In the case of associations,
partnerships, or corporations, the president and each of the directors thereof shall
be responsible for the acts committed by such association, corporation, or
partnership.

Section 104
Destruction of Mining Structures

Any person who willfully destroys or damages structures in or on the mining area or
on the mill sites shall, upon conviction, be imprisoned for a period not to exceed five
(5) years and shall, in addition, pay compensation for the damages which may have
been caused thereby.

Section 105
Mines Arson

Any person who willfully sets fire to any mineral stockpile, mine or workings, fittings
or a mine, shall be guilty of arson and shall be punished, upon conviction, by the
appropriate court in accordance with the provisions of the Revised Penal Code and
shall, in addition, pay compensation for the damages caused hereby.

Section 106
Willful Damage to a Mine

Any person who willfully damages a mine, unlawfully causes water to run into a
mine, or obstructs any shaft or passage to a mine, or renders useless, damages or
destroys any machine, appliance, apparatus, rope, chain, tackle, or any other things
used in a mine, shall be punished, upon conviction, by the appropriate court, by
imprisonment not exceeding a period of five (5) years and shall, in addition, pay
compensation for the damages caused thereby.

Section 107
Illegal Obstruction to Permittees or Contractors

Any person who, without justifiable cause, prevents or obstructs the holder of any
permit, agreement or lease from undertaking his mining operations shall be
punished, upon conviction by the appropriate court, by a fine not exceeding Five
thousand pesos (P5,000.00) or imprisonment not exceeding one (1) year, or both, at
the discretion of the court.

Section 108
Violation of the Terms and Conditions of the Environmental Compliance Certificate

Any person who willfully violates or grossly neglects to abide by the terms and
conditions of the environmental compliance certificate issued to said person and
which causes environmental damage through pollution shall suffer the penalty of
imprisonment of six (6) months to six (6) years or a fine of Fifty thousand pesos
(P50,000.00) to Two hundred thousand pesos (P200,000.00), or both, at the
discretion of the court.

Section 109
Illegal Obstruction to Government Officials

Any person who illegally prevents or obstructs the Secretary, the Director or any of
their representatives in the performance of their duties under the provisions of this
Act and of the regulations promulgated hereunder shall be punished upon
conviction, by the appropriate court, by a fine not exceeding Five thousand pesos
(P5,000.00) or by imprisonment not exceeding one (1) year, or both, at the
discretion of the court.

Section 110
Other Violations

Any other violation of this Act and its implementing rules and regulations shall
constitute an offense punishable with a fine not exceeding Five thousand pesos
(P5,000.00).

Section 111
Fines

The Secretary is authorized to charge fines for late or non-submission of reports in

accordance with the implementing rules and regulations of this Act.
CHAPTER XX

TRANSITORY AND MISCELLANEOUS PROVISIONS

Section 112
Non-Impairment
of Existing Mining/Quarrying Rights

All valid and existing mining lease contracts, permits/licenses, leases pending
renewal, mineral production-sharing agreements granted under Executive Order No.
279, at the date of effectivity of this Act, shall remain valid, shall not be impaired,
and shall be recognized by the Government: Provided, That the provisions of
Chapter XIV on government share in mineral production-sharing agreement and of
Chapter XVI on incentives of this Act shall immediately govern and apply to a
mining lessee or contractor unless the mining lessee or contractor indicates his
intention to the secretary, in writing, not to avail of said provisions: Provided,
further, That no renewal of mining lease contracts shall be made after the expiration
of its term: Provided, finally, That such leases, production-sharing agreements,
financial or technical assistance agreements shall comply with the applicable
provisions of this Act and its implementing rules and regulations.

Section 113
Recognition of Valid and Existing Mining Claims and Lease/Quarry Applications

Holders of valid and existing mining claims, lease/quarry applications shall be given
preferential rights to enter into any mode of mineral agreement with the
government within two (2) years from the promulgation of the rules and regulations
implementing this Act.

R.A. 7076 Small Scale Mining Act

REPUBLIC ACT NO. 7076

AN ACT CREATING A PEOPLES SMALL-SCALE MINING PROGRAM AND FOR OTHER

PURPOSES.

Section 1. Title. This Act shall be known as the Peoples Small-scale Mining Act of
1991.
chan robles virtual law library

Sec. 2. Declaration of Policy. It is hereby declared of the State to promote,

develop, protect and rationalize viable small-scale mining activities in order to
generate more employment opportunities and provide an equitable sharing of the
nations wealth and natural resources, giving due regard to existing rights as herein
provided.chan robles virtual law library

Sec. 3. Definitions. For purposes of this Act, the following terms shall be defined
as follows:

(a) Mineralized areas refer to areas with naturally occurring mineral deposits of
gold, silver, chromite, kaolin, silica, marble, gravel, clay and like mineral resources;
chan robles virtual law library

(b) Small-scale mining refers to mining activities which rely heavily on manual
labor using simple implement and methods and do not use explosives or heavy
mining equipment;

(c) Small-scale miners refer to Filipino citizens who, individually or in the company
of other Filipino citizens, voluntarily form a cooperative duly licensed by the
Department of Environment and Natural Resources to engage, under the terms and
conditions of a contract, in the extraction or removal of minerals or ore-bearing
materials from the ground;

(d) Small-scale mining contract refers to co-production, joint venture or mineral

production sharing agreement between the State and a small-scale mining
contractor for the small-scale utilization of a plot of mineral land;

(e) Small-scale mining contractor refers to an individual or a cooperative of smallscale miners, registered with the Securities and Exchange Commission or other
appropriate government agency, which has entered into an agreement with the
State for the small-scale utilization of a plot of mineral land within a peoples smallscale mining area;

(f) Active mining area refers to areas under actual exploration, development,
exploitation or commercial production as determined by the Secretary after the
necessary field investigation or verification including contiguous and geologically
related areas belonging to the same claimowner and/or under contract with an
operator, but in no case to exceed the maximum area allowed by law;

(g) Existing mining right refers to perfected and subsisting claim, lease, license or
permit covering a mineralized area prior to its declaration as a peoples small-scale
mining area;

(h) Claimowner refers to a holder of an existing mining right;

(i) Processor refers to a person issued a license to engage in the treatment of

minerals or ore-bearing materials such as by gravity concentration, leaching
benefication, cyanidation, cutting, sizing, polishing and other similar activities;

(j) License refers to the privilege granted to a person to legitimately pursue his
occupation as a small-scale miner or processor under this Act;chan robles virtual
law library

(k) Mining plan refers to a two-year program of activities and methodologies

employed in the extraction and production of minerals or ore-bearing materials,
including the financial plan and other resources in support thereof;

(l) Director refers to the regional executive director of the Department of

Environment and Natural Resources; and

(m) Secretary refers to the Secretary of the Department of Environment and

Natural Resources.

Sec. 4. Peoples Small-scale Mining Program. For the purpose of carrying out the
declared policy provided in Section 2 hereof, there is hereby established a Peoples
Small-scale Mining Program to be implemented by the Secretary of the Department
of Environment and Natural Resources, hereinafter called the Department, in
coordination with other concerned government agencies, designed to achieve an
orderly, systematic and rational scheme for the small-scale development and
utilization of mineral resources in certain mineral areas in order to address the
social, economic, technical, and environmental connected with small-scale mining
activities.

The Peoples Small-scale Mining Program shall include the following features:

(a) The identification, segregation and reservation of certain mineral lands as

peoples small-scale mining areas;

(b) The recognition of prior existing rights and productivity;

(c) The encouragement of the formation of cooperatives;

(d) The extension of technical and financial assistance, and other social services;

(e) The extension of assistance in processing and marketing;

(f) The generation of ancillary livelihood activities;chan robles virtual law library

(g) The regulation of the small-scale mining industry with the view to encourage
growth and productivity; and

(h) The efficient collection of government revenue.

Sec. 5. Declaration of Peoples Small-scale Mining Areas. The Board is hereby

authorized to declare and set aside peoples small-scale mining areas in sites
onshore suitable for small-scale mining, subject to review by the Secretary,
immediately giving priority to areas already occupied and actively mined by smallscale miners before August 1, 1987: Provided, That such areas are not considered
as active mining areas: Provided, further, That the minerals found therein are
technically and commercially suitable for small-scale mining activities: Provided,
finally, That the areas are not covered by existing forest rights or reservations and
have not been declared as tourist or marine reserved, parks and wildlife
reservations, unless their status as such is withdrawn by competent authority.

.chan robles virtual law library

Sec. 6. Future Peoples Small-scale Mining Areas. The following lands, when
suitable for small-scale mining, may be declared by the Board as peoples small
scale mining areas:

(a) Public lands not subject to any existing right;chan robles vi

rtual law library

(b) Public lands covered by existing mining rights which are not active mining areas;
and

(c) Private lands, subject to certain rights and conditions, except those with
substantial improvements or in bona fide and regular use as a yard, stockyard,
garden, plant nursery, plantation, cemetery or burial site, or land situated within
one hundred meters (100 m.) from such cemetery or burial site, water reservoir or a
separate parcel of land with an area of ten thousand square meters (10,000 sq. m.)
or less.

Sec. 7. Ancestral Lands. No ancestral land may be declared as a peoples smallscale mining area without the prior consent of the cultural communities concerned:
Provided, That, if ancestral lands are declared as peoples small-scale mining areas,
the members of the cultural communities therein shall be given priority in the
awarding of small-scale mining contracts.
.chan robles virtual law library

Sec. 8. Registration of Small-scale Miners. All persons undertaking small-scale

mining activities shall register as miners with the Board and may organize
themselves into cooperatives in order to qualify for the awarding of a peoples
small-scale mining contract.

Sec. 9. Award of Peoples Small-scale Mining Contracts. A peoples small-scale

mining contract may be awarded by the Board to small-scale miners who have
voluntarily organized and have duly registered with the appropriate government
agency as an individual miner or cooperative; Provided, That only one (1) peoples
small-scale mining contract may be awarded at any one time to a small-scale
mining operations within one (1) year from the date of award: Provided, further,
That priority shall be given or city where the small-scale mining area is located.

Applications for a contract shall be subject to a reasonable fee to be paid to the

Department of Environment and Natural Resources regional office having
jurisdiction over the area.chan robles virtual law library

Sec. 10. Extent of Contract Area. The Board shall determine the reasonable size
and shape of the contract area following the meridional block system established
under Presidential Decree No. 463, as amended, otherwise known as the Mineral
Resources Development Decree of 1974, but in no case shall the area exceed
twenty hectares (20 has.) per contractor and the depth or length of the tunnel or
adit not exceeding that recommended by the director taking into account the
following circumstances:

(a) Size of membership and capitalization of the cooperative;

(b) Size of mineralized area;

(c) Quantity of mineral deposits;

(d) Safety of miners;chan robles virtual law library

(e) Environmental impact and other considerations; and

(f) Other related circumstances.

Sec. 11. Easement Rights. Upon the declaration of a peoples small-scale mining
area, the director, in consultation with the operator, claimowner, landowner or
lessor of an affected area, shall determine the right of the small scale miners to
existing facilities such as mining and logging roads, private roads, port and
communication facilities, processing plants which are necessary for the effective
implementation of the Peoples Small-scale Mining Program, subject to payment of
reasonable fees to the operator, claimowner, landowner or lessor.

.chan robles virtual law library

Sec. 12. Rights Under a Peoples Small-scale Mining Contract. A peoples smallscale mining contract entitles the small-scale mining contractor to the right to mine,
extract and dispose of mineral ores for commercial purposes. In no case shall a
small-scale mining contract be subcontracted, assigned or otherwise transferred.

Sec. 13. Terms and Conditions of the Contract. A contract shall have a term of
two (2) years, renewable subject to verification by the Board for like periods as long
as the contractor complies with the provisions set forth in this Act, and confers upon
the contractor the right to mine within the contract area: Provided, That the holder
of a small-scale mining contract shall have the following duties and obligations:

(a) Undertake mining activities only in accordance with a mining plan duly approved
by the Board;

(b) Abide by the Mines and Geosciences Bureau and the small-scale Mining Safety
Rules and Regulations;

(c) Comply with his obligations to the holder of an existing mining right;

(d) Pay all taxes, royalties or government production share as are now or may
hereafter be provided by law;

(e) Comply with pertinent rules and regulations on environmental protection and
conservation, particularly those on tree-cutting mineral-processing and pollution
control;

(f) File under oath at the end of each month a detailed production and financial
report to the Board; and

(g) Assume responsibility for the safety of persons working in the mines.

Sec. 14. Rights of Claimowners. In case a site declared and set aside as a
peoples-scale mining area is covered by an existing mining right, the claimowner
and the small-scale miners therein are encouraged to enter into a voluntary and
acceptable contractual agreement with respect to the small-scale utilization of the
mineral values from the area under claim. In case of disagreement, the claimowner
shall be entitled to the following rights and privileges:

(a) Exemption from the performance of annual work obligations and payment of
occupation fees, rental, and real property taxes;chan robles virtual law library

(b) Subject to the approval of the Board, free access to the contract area to conduct
metallurgical tests, explorations and other activities, provided such activities do not
unduly interfere with the operations of the small-scale miners; and

(c) Royalty equivalent to one and one half percent (1 1/2%) of the gross value of the
metallic mineral output or one percent (1%) of the gross value of the nonmetallic
mineral output to be paid to the claimowner: Provided, That such rights and
privileges shall be available only if he is not delinquent and other performance of his
annual work obligations and other requirements for the last two (2) years prior to
the effectivity of this Act.

Sec. 15. Rights of Private Landowners. The private landowner or lawful possessor
shall be notified of any plan or petition to declare his land as a peoples small-scale
mining area. Said landowner may oppose such plan or petition in an appropriate
proceeding and hearing conducted before the Board.

.chan robles virtual law library

If a private land is declared as a peoples small-scale mining area, the owner and
the small-scale mining contractors are encouraged to enter into a voluntary and
acceptable contractual agreement for the small-scale utilization of the mineral
values from the private land: Provided, That the owner shall in all cases be entitled
to the payment of actual damages which he may suffer as a result of such
declaration: Provided, further, That royalties paid to the owner shall in no case
exceed one percent (1%) of the gross value of the minerals recovered as royalty.

Sec. 16. Ownership of Mill Tailings. The small-scale mining contractor shall be the
owner of all mill tailings produced from the contract area. He may sell the tailings or
have them processed in any custom mill in the area: Provided, That, if the smallscale mining contractor decide to sell its mill tailings, the claimowner shall have a
preemptive right to purchase said mill tailings at the prevailing market price.

Sec. 17. Sale of Gold. All gold produced by small-scale miners in any mineral
area shall be sold to the Central Bank, or its duly authorized representatives, which
shall buy it at prices competitive with those prevailing in the world market
regardless of volume or weight.

The Central Bank shall establish as many buying stations in gold-rush areas to fully
service the requirements of the small-scale minerals thereat.

Sec. 18. Custom Mills. The establishment and operation of safe and efficient
customs mills to process minerals or ore-bearing materials shall be limited to
mineral processing zones duly designated by the local government unit concerned
upon recommendation of the Board.

In mining areas where the private sector is unable to establish custom mills, the
Government shall construct such custom mills upon the recommendation of the
Board based on the viability of the project.

The Board shall issue licenses for the operation of custom mills and other
processing plants subject to pollution control and safety standards.

The Department shall establish assay laboratories to cross-check the integrity of

custom mills and to render metallurgical and laboratory services to mines.

Custom mills shall be constituted as withholding agents for the royalties, production
share or other taxes due the Government.

Sec. 19. Government Share and Allotment. The revenue to be derived by the
Government from the operation of the mining program herein established shall be
subject to the sharing provided in the Local Government Code.

Sec. 20. Peoples Small-scale Mining Protection Fund. There is hereby created a
Peoples Small-scale Mining Protection Fund which shall be fifteen percent (15%) of
the national governments share due the Government which shall be used primarily
for information dissemination and training of small-scale miners on safety, health
and environmental protection, and the establishment of mine rescue and recovery
teams including the procurement of rescue equipment necessary in cases of
emergencies such as landslides, tunnel collapse, or the like.

The fund shall also be made available to address the needs of the small-scale
miners brought about by accidents and/or fortuitous events.

Sec. 21. Rescission of Contracts and Administrative Fines. The noncompliance

with the terms and conditions of the contract or violation of the rules and
regulations issued by the Secretary pursuant to this Act, as well as the
abandonment of the mining site by the contractor, shall constitute a ground for the
cancellation of the contracts and the ejectment from the peoples small-scale
mining area of the contractor. In addition, the Secretary may impose fines against
the violator in an amount of not less than Twenty thousand pesos (P20,000.00) and
not more than One hundred thousand pesos (P100,000.00). Nonpayment of the fine
imposed shall render the small-scale mining contractor ineligible for other smallscale mining contracts.chan robles virtual law library

Sec. 22. Reversion of Peoples Small-scale Mining Areas. The Secretary, upon
recommendation of the director, shall withdraw the status of the peoples smallscale mining area when it can no longer feasibly operated on a small-scale mining

basis or when the safety, health and environmental conditions warrant that the
same shall revert to the State for proper disposition.

Sec. 23. Actual Occupation by Small-scale Miners. Small-scale miners who have
been in actual operation of mineral lands on or before August 1, 1987 as
determined by the Board shall not be dispossessed, ejected or removed from said
areas: Provided, That they comply with the provisions of this Act.

Sec. 24. Provincial/City Mining Regulatory Board. There is hereby created under
the direct supervision and control of the Secretary a provincial/city mining
regulatory board, herein called the Board, which shall be the implementing agency
of the Department, and shall exercise the following powers and functions, subject to
review by the Secretary:

(a) Declare and segregate existing gold-rush areas for small-scale mining;

.chan robles virtual law library

(b) Reserve future gold and other mining areas for small-scale mining;

(c) Award contracts to small-scale miners;

(d) Formulate and implement rules and regulations related to small-scale mining;

(e) Settle disputes, conflicts or litigations over conflicting claims within a peoples
small-scale mining area, an area that is declared a small-mining; and

(f) Perform such other functions as may be necessary to achieve the goals and
objectives of this Act.

Sec. 25. Composition of the Provincial/City Mining Regulatory Board. The Board
shall be composed of the Department of Environment and Natural Resources
representative as Chairman; and the representative of the governor or city mayor,
as the representative of the governor or city mayor, as the case may be, one (1)
small scale mining representative, one (1) big-scale mining representative, and the
representative from a nongovernment organization who shall come from an
environmental group, as members.

.chan robles virtual law library

The representatives from the private sector shall be nominated by their respective
organizations and appointed by the Department regional director. The Department
shall provide the staff support to the Board.chan robles virtual law library

Sec. 26. Administrative Supervision over the Peoples Small-scale Mining Program.
The Secretary through his representative shall exercise direct supervision and
control over the program and activities of the small-scale miners within the peoples
small-scale mining area.

The Secretary shall within ninety (90) days from the effectivity of this Act
promulgate rules and regulations to effectively implement the provisions of the
same. Priority shall be given to such rules and regulations that will ensure the least
disruption in the operations of the small-scale miners.

Sec. 27. Penal Sanctions. Violations of the provisions of this Act or of the rules
and regulations issued pursuant hereto shall be penalized with imprisonment of not
less than six (6) months nor more than six (6) years and shall include the
confiscation and seizure of equipment, tools and instruments.

Sec. 28. Repealing Clause. All laws, decrees, letters of instruction, executive
orders, rules and regulations, and other issuances, or parts thereof, in conflict or
inconsistent with this Act are hereby repealed or modified accordingly.

Sec. 29. Separability Clause. Any section or provision of this Act which may be
declared unconstitutional shall not affect the other sections or provisions hereof.

Sec. 30. Effectivity. This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in a national newspaper of general circulation.chan robles
virtual law library